Shopko set to shutter more stores

Powell store survives

Shopko leaders are closing roughly two-thirds of their stores, but hope to keep Powell’s location open. A report from Shopko’s investment banker indicates that Powell’s store is one of the chain’s top-performing locations.

Company leaders announced Wednesday that they’re closing another 137 Shopko stores — including the locations in Worland, Lander, Mountain View and Green River; the Shopko Hometowns in Greybull and Thermopolis were hit by earlier rounds of closures.

All told, Shopko is shuttering nearly two-thirds of the roughly 370 retail locations it once had. It’s part of the chain’s efforts to save the struggling company by slimming it down and reorganizing it through the Chapter 11 bankruptcy process.

Powell’s store appears to be safe for the time being, but its pharmacy — like all of Shopko’s struggling dispensaries — will close. Shopko officials announced Friday that they plan to sell the Powell pharmacy’s files to Walgreens. Walgreens has offered $175,000 for Shopko’s files at 20 locations, including Powell, Worland and Wheatland. Competing bids are being accepted through Feb. 22.

Shopko had hoped to raise around $82 million by selling off its 146 pharmacies, but an auction raised only $52 million, with no buyers initially found for the assets in Powell and 26 other locations. The cash shortfall prompted last week’s decision to close the additional stores.

“While we were happy with the results [of the auction] given the circumstances,” the lower than expected prices “did require us to re-evaluate the game plan a little bit here,” Shopko attorney Steven Serajeddini said in Nebraska’s bankruptcy court on Thursday.

He called the additional round of closings “extremely difficult,” but said they would help Shopko’s efforts to survive.

The so-called “New Shopko” is “comprised of only top-performing stores [and] will operate in the Midwestern and Northwestern states where Shopko has a longstanding history and loyal customer base,” the company’s investment banker says.

Shopko leaders are currently looking for bidders to buy the downsized chain or investors interested in keeping the stores going.

“Buyers are focused on a smaller footprint that is centered more in Shopko’s core Midwestern markets, and I think part of that is a natural result of the [tough] general retail environment,” Serajeddini said. “But we do think those buyers exist and we intend to go out and try to find them,”

An auction is set for March 19.

Shopko entered Chapter 11 bankruptcy last month to deal with around $400 million in debt, citing pressure from online retailers as one of the reasons for its struggles.

Only seven of Shopko’s 13 locations in Wyoming — the stores in Powell, Buffalo, Afton, Douglas, Torrington, Wheatland and Newcastle — are currently set to remain open.